Today the Energy Transition is fundamental, to fight Climate Change, meeting the goals set by United Nations in the Paris Agreement to keep global temperatures well below 2 C° from pre-industrial levels, and to enhance Energy Security. In this dissertation, we investigate the role that Mega Private Equity Funds are interpreting in the realm of Energy Transition. Firstly, we delve into Energy Transition, presenting the factors behind the transformation, the potential future scenarios, and the current investment flows. Besides the necessary phasing out of fossil fuel-based technologies, we highlight the massive investments required to accelerate renewable energy deployment, improve energy efficiency, and adopt other vital low-carbon technologies to achieve the goals outlined in the Paris Agreement. Secondly, starting from an overview of Private Equity, we focus on Mega Private Equity Funds, i.e., vehicles with a size equal to or larger than USD 5 billion, and we introduce their investment criteria and critical drivers of performance, i.e., their availability of capital, tax efficiency, and strong reputation. Lastly, we bridge the gap between Mega PE Funds and the Current Energy Transition by analyzing Mega Pe Funds of the so-called Big Four Private Equity Firms through qualitative and quantitative analyses. The qualitative results led to the understanding that Energy Transition offers profitable business and strategic opportunities. However, regulation uncertainty is preventing these vehicles from massively entering the market. Thanks to the quantitative results, we found that almost half of Mega PE Funds’ Energy-Transition-related investments positively contribute to the Energy Transition, primarily focusing on companies in sectors different from power production. We conclude that Mega PE Funds play a double catalyst role in the Current Energy Transition: (1) invest and support the growth of companies providing strategic products for the transition; (2) acquire and strategically pivot legacy firms to enable their “gray-to-green” journey.
La Transizione Energetica è fondamentale per combattere il Cambiamento Climatico, con gli obiettivi prefissati dalle Nazioni Unite nell'Accordo di Parigi per mantenere le temperature globali ben al di sotto di 2 C° rispetto ai livelli preindustriali, e per garantire la Sicurezza Energetica. In questa tesi, indaghiamo il ruolo che i "Mega Private Equity Funds" stanno interpretando nell'ambito della Transizione Energetica. In primo luogo, approfondiamo la Transizione Energetica, presentando i fattori alla base della trasformazione, i potenziali scenari futuri e gli attuali flussi di investimento. Sottolineiamo i massicci investimenti necessari per accelerare la diffusione delle energie rinnovabili e il miglioramento dell'efficienza energetica. In secondo luogo, dopo una panoramica sul Private Equity (PE), consideriamo i "Mega Private Equity Funds", i fondi con dimensioni pari o superiori a 5 miliardi di dollari, introducendo i loro criteri di investimento e i fattori critici di performance, quali la disponibilità di capitale, l'efficienza fiscale e la solida reputazione. Infine, colmiamo il divario tra i "Mega PE Funds" e l'attuale Transizione Energetica analizzando i "Mega Pe Funds" delle cosiddette "Big Four Private Equity Firms" attraverso analisi qualitative e quantitative. I risultati qualitativi hanno evidenziato che la transizione energetica offre opportunità di business e strategiche profittevoli. Tuttavia, l'incertezza normativa impedisce un loro ingresso massiccio nel mercato. Grazie ai risultati quantitativi, abbiamo scoperto che quasi la metà degli investimenti dei Mega PE Funds legati alla Transizione Energetica contribuiscono positivamente alla transizione, concentrandosi principalmente su aziende in settori diversi dalla produzione di energia. Concludiamo che i “Mega PE Funds” svolgono un doppio ruolo di catalizzatore nell'attuale Transizione Energetica: (1) investono in aziende che forniscono prodotti strategici per la transizione; (2) consentono la trasformazione “gray-to-green” di aziende tradizionali.
the role of mega private equity funds in the energy transition
CIANNI, DAVIDE;Elli, Pietro
2022/2023
Abstract
Today the Energy Transition is fundamental, to fight Climate Change, meeting the goals set by United Nations in the Paris Agreement to keep global temperatures well below 2 C° from pre-industrial levels, and to enhance Energy Security. In this dissertation, we investigate the role that Mega Private Equity Funds are interpreting in the realm of Energy Transition. Firstly, we delve into Energy Transition, presenting the factors behind the transformation, the potential future scenarios, and the current investment flows. Besides the necessary phasing out of fossil fuel-based technologies, we highlight the massive investments required to accelerate renewable energy deployment, improve energy efficiency, and adopt other vital low-carbon technologies to achieve the goals outlined in the Paris Agreement. Secondly, starting from an overview of Private Equity, we focus on Mega Private Equity Funds, i.e., vehicles with a size equal to or larger than USD 5 billion, and we introduce their investment criteria and critical drivers of performance, i.e., their availability of capital, tax efficiency, and strong reputation. Lastly, we bridge the gap between Mega PE Funds and the Current Energy Transition by analyzing Mega Pe Funds of the so-called Big Four Private Equity Firms through qualitative and quantitative analyses. The qualitative results led to the understanding that Energy Transition offers profitable business and strategic opportunities. However, regulation uncertainty is preventing these vehicles from massively entering the market. Thanks to the quantitative results, we found that almost half of Mega PE Funds’ Energy-Transition-related investments positively contribute to the Energy Transition, primarily focusing on companies in sectors different from power production. We conclude that Mega PE Funds play a double catalyst role in the Current Energy Transition: (1) invest and support the growth of companies providing strategic products for the transition; (2) acquire and strategically pivot legacy firms to enable their “gray-to-green” journey.| File | Dimensione | Formato | |
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https://hdl.handle.net/10589/206780